Why Do Some Bt-cotton Farmers In China Continue To Use High Levels Of Pesticides

INTERNATIONAL JOURNAL OF AGRICULTURAL SUSTAINABILITY 1473-5903/05/01 0044-13 $20.00/0

Vol. 3, No. 1, 2005 # 2005 D. Pemsl et al.

Why Do Some Bt-Cotton Farmers in China Continue to Use High Levels of Pesticides? D. Pemsl,1 H. Waibel1 and A.P. Gutierrez2 1 Department of Economics and Business Administration, University of Hannover, Germany; 2Department of Environmental Science, Policy & Management, University of California, Berkeley, USA

perspective, it needs to be pointed out that currently, on a global scale, only a small share of about 1.5% of the crop land2 is planted to transgenic crops, of which an estimated two-thirds is in industrialised countries. Over 99% of today’s agricultural biotechnology products are in pest management with 70% in the form of herbicide tolerance and the remainder being insect resistance in the form of Bt crops, namely cotton and corn (James, 2004). Among the developing countries, China is the only one that has introduced Bt-cotton on a large scale. In 2004, an estimated 3.7 million hectare or about 65% of the national cotton area were planted with Bt varieties (James, 2004). Since commercial approval of biotechnology products is granted by province, diffusion shows a distinct regional distribution. For example, Bt-cotton has spread rapidly in Shandong and Hebei Province while in other provinces these varieties are not grown at all or to a much lesser extent. Two years after the introduction of Bt-cotton varieties in China in 1997, economists have carried out impact assessment studies (Pray et al., 2001, 2002). These studies, which compared farmers growing Bt-cotton with those growing conventional varieties, found that Bt varieties reduced the quantity of chemical pesticides by around 80%, with 67% fewer sprays and an 82% reduction in pesticide costs (Huang et al., 2002). Reduction of toxic chemical pesticides in developing country agriculture is an important development issue, especially in view of their negative effects on the health status of the rural population (Antle & Capalbo, 1994; Crissman et al., 1994; Pingali et al., 1994; Rola & Pingali, 1993). Hence, the benefits of Bt crops to a large extent depend on their potential to reduce external costs by substituting chemical pesticides, while in China yield increase due to Bt-cotton is minor (Huang et al., 2002).

China was the first developing country to introduce Bt cotton on a large scale. This paper provides an indepth economic analysis of Bt cotton production by small-scale farmers in China. Data were collected in 2002 in Linqing County, in Shandong Province and comprised a season-long cotton production monitoring with 150 farmers and complementary household interviews. For quality assessment, the Bt toxin concentration of the various Bt varieties used by the farmers was determined for each plot. All farmers were growing insect resistant Bt cotton varieties. Yet, they sprayed high amounts of chemical insecticides, out of which 40% were extremely or highly hazardous. The paper reviews methodological issues inherent to impact assessment of crop biotechnology and identifies market and institutional failure as possible reasons for continued high pesticide use. Using the damage function methodology the coefficients for both damage control inputs, i.e., Bt varieties (measured as toxin concentration), and insecticide quantity were not significantly different from zero. Results show that absence of enabling institutions and lack of farmer knowledge can considerably limit the benefits of Bt cotton for small-scale farmers. The paper points out the importance to include the institutional conditions in the evaluation of agricultural biotechnology in developing countries.

Keywords: Bt-cotton, biotechnology, pesticide use, China

Introduction The discussion of whether modern biotechnology1 can help agriculture in developing countries to overcome some of its most pressing problems is controversial. The advocates for biotechnology stress the great potential for yield increase and pesticide reduction while others point out the potential risks for biodiversity and human health as well as institutional problems for implementation. To put this debate into 44

Bt-Cotton Farmers Use High Levels of Pesticides

When looking at the methodology of past impact studies a number of factors can be found that could have pre-determined the unanimously positive results. One common problem is the reference group used to measure the impact of Bt varieties. The concept of Pray et al. (2002) was to follow the path of Bt-introduction over a period of three years and interviewing adopters and non-adopters in different provinces. However, non-adopters were not available anymore in subsequent years in the provinces where early introduction of the technology occurred. Instead, non-adopters were sampled in other provinces where climatic, ecological or socio-economic conditions can be different. Figure 1 depicts the sampling scheme used by Pray et al. (2002) and the average cotton yield in kilogram per hectare by year and province. The graph shows that first, the sample size for adopters exceeds by far those of non-adopters. Second, Bt-cotton plots were included without a corresponding non-Bt sample from the same province. Comparing average yields between Bt and non-Bt over the whole sample can bias the results since yields (and inputs) vary considerably among the provinces. The average yield by year and province for Bt and non-Bt differs from the averages for all samples (numbers on top of each bar in Figure 1). Furthermore, on average, nonadopters had negative net returns from cotton

Figure 1 Sampling scheme and average yield by province and year for Bt and non-Bt cotton Note: Bars indicate the number of plots by treatment (Bt versus non-Bt) and year and show the proportion sampled in the different provinces. The numbers are the average seed cotton yield (kg per hectare) by province as well as for all samples per treatment and year. Source: Based on Pray et al. (2002)

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production in all three years (Pray et al., 2002). This questions whether the chosen counterfactual is valid. Also, since no baseline data were collected it cannot be shown whether adopters and non-adopters had similar socioeconomic conditions before Bt introduction. Thus, the classic ‘difference in difference model’ that is often demanded for scientific impact assessment was not applied and the observed differences in yield and pesticide use are therefore not necessarily attributable to the introduction of Bt varieties. A second factor that deserves close scrutiny is the data collection protocol used in impact studies. Since in China the economic benefits of Bt-cotton are mainly determined by pesticide reduction, accurate measurement of these inputs is critical. Among all crop production inputs chemical pesticides are among the most difficult to quantify especially under the conditions of developing countries. High frequency of applications with a large number of different product names and mixtures of different products make it extremely difficult to measure pesticide quantity especially by recall surveys. Also, the practice of spot treatments poses a source of error when farmers do not keep records and when data are collected months after pesticide application has taken place. Finally, a question that emerges from previous studies is that, regardless of whether farmers use Bt or non-Bt varieties, the actual level of pesticide use dramatically exceeded its economically optimal level as computed from estimated factor productivity by Huang et al. (2002). These authors attribute this overuse to anecdotal evidence about misguided extension advice. Since part of the income of extension workers stems from pesticide sales they have no incentive to encourage farmers to use less pesticides. In a recent study, Yang et al. (2005) found that the use of pesticides in Bt-cotton production in Shandong Province was on average 12.7 applications with average amounts of 18.9 kg per hectare. A majority of farmers still considered the cotton bollworm as a problem although all were using Bt-cotton. Such observations show that although the economic benefits of Bt-cotton in China were demonstrated at an early stage of adoption, the sustainability of these benefits can be questioned. They also indicate that pesticide reduction requires other (supplementary) means such as a policy change. The prevailing institutional conditions are crucial to the realisation of potential benefits of

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International Journal of Agricultural Sustainability

new technologies especially those aiming at pesticide use reduction. The lessons learned from the introduction of integrated pest management (IPM) that showed high benefits in experiments and pilot projects are that institutional as well as socio-economic and technical constraints can considerably limit farm-level benefits and even prevent technology adoption (Beckmann & Wesseler, 2003). The objective of this paper is to investigate the effect of growing Bt-cotton varieties on pesticide use and productivity in China several years after these varieties were introduced. A case study was conducted in Linqing County in Shandong Province, where Bt-cotton varieties obtained commercial approval in 1997. In particular, we address the following questions: (1) What is the status of chemical pesticide use in Bt-cotton production? (2) Is Bt-cotton an effective and efficient method under the prevailing on-farm and institutional conditions in the study area? (3) Under the institutional conditions of China, is Bt-cotton likely to lead to sizeable reduction in chemical pesticide use and therefore generate the expected health and environmental benefits? The remaining text is organised as follows: the next section gives a brief description of the data collection methodology and the analytical procedure. The third section shows the pesticide use practices in the study area and provides an assessment of the productivity impact of Bt-cotton. In the last section of the paper we draw conclusions and make some suggestions on how the methodology for impact assessment of genetically modified crops could be advanced.

Methodology and Data Data collection One major problem when assessing the impact of Bt-cotton on input use and crop productivity amongst small holders in developing countries is the collection of data. As pointed out above, the validity of pesticide use information is crucial when measuring the benefit of Bt-cotton, which is mainly attributed to a reduction in pesticide use (see also Falck-Zepeda et al., 1999; Pray et al., 2001). Measuring pesticide use under the conditions of small-scale farming in developing countries poses a great challenge and requires carefully planned studies with well-designed data collection protocols (Waibel et al., 2003). A large array of pesticides is available on Chinese markets. The type of active ingredients and the concentration of the product are often labelled improperly or not at all and hence are unknown to the farmer. Also, when pesticide application frequency is high or when mixtures of products are applied, farmers, when surveyed at the end of the season, can hardly remember the pesticide quantities they used in individual sprays. Table 1 gives an overview of the main problems in measuring pesticide inputs and explains how these problems are addressed by data collection through monitoring used in this study. In this study, we collected data from farmers growing Bt-cotton in five villages in Shandong Province.3 A total of 150 farm households were interviewed three times during the 2002 cotton season. Data comprised socio-economic parameters, cropping pattern, farmers’ perception of pest pressure, and data on production input and yield of cotton. During an orientation phase in the same area (interviews with 60 farm

Table 1 Problems of measuring pesticide use and monitoring response Aspect of pesticide use

Measurement problem

Monitoring response

Dosage

Dosage changes during the season, difficult to Farmers record immediately after each remember since mixtures and many applications application

Treatment frequency

Long cotton season and high number of pesticide applications

Farmers record immediately after each application

Mixture

Widespread application of mixtures (two or more pesticides)

Farmers record immediately after each application

Names of pesticides

About 500 different products used by the sampled farmers, often very similar names

Farmers can copy names from bottles, interviewer can check bottles

Price of pesticides

Only person who purchases pesticides may know the price; prices change during the season

Farmers record directly, possibility to check with the purchaser

Bt-Cotton Farmers Use High Levels of Pesticides

households in 2001) we found that when asked after the crop was harvested, respondents were generally not able to remember the amounts and names of pesticides applied in cotton production (Pemsl, 2002). Particular care was therefore taken in collecting pesticide use information. To increase data accuracy, each of the 150 farmers recorded all cotton production inputs (labour, irrigation, type and amount of fertiliser and pesticide products) for one representative plot over the whole season (April to late October 2002). The monitoring also captured financial information (expenditures for inputs) as well as the timing of all farming activities and detailed information of each pesticide product even if mixtures were applied. Recording forms were collected every second week and immediately checked for consistency and completeness together with the farmer and added to if required. In addition, information on active ingredients of pesticide products were collected from pesticide containers, local shops and from product registration lists. In order to obtain a measure of the trait ‘Bt’, cotton leaf tissue from each respondent’s plot was sampled and analysed to assess the Bt-toxin concentration (ng toxin g21 fresh leaf).4 The sample was collected in parallel to the fourth generation of the cotton bollworm. Terminal leaves from five different points in the plot and for each point for three plants in a row were collected and mixed to obtain the plot sample. Leaves were flash-frozen with liquid nitrogen and kept frozen until laboratory analysis. Analytical procedure One possibility to assess the input substitution and productivity effects of Bt varieties as pest control agents is to apply the damage control framework of Lichtenberg and Zilberman (1986). In previous studies (e.g. Huang et al., 2002; Qaim & Zilberman, 2003) the effect of the Bt trait was captured through a variety dummy using data from the fields of adopters and nonadopters of Bt-cotton. The problem with this approach is that such a variety dummy may include also non-pest control effects if other factors cannot be adequately controlled. In our sample we only included farmers who use Bt varieties since in Shandong Province no conventional (non-Bt) seed is available on local markets and therefore adoption must be considered as 100%.

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Therefore, in order to obtain a measure of the effect of Bt, we include the Bt concentration as a continuous variable in the damage control function. A general problem in estimating production functions that include pest control variables is that regressors (independent or explanatory variables) are correlated with the production function error term 1 (see also Huang et al., 2002) because unobserved factors, such as climate, may result in high input levels of insecticide use and at the same time low yields. However, if regressors are correlated with the error term, parameter estimates of ordinary least squares (OLS) procedures are biased and the results are inconsistent (Johnston & DiNardo, 1997). To overcome this problem, an iterative three stage least square (3SLS) procedure using instrumental variables to estimate the predicted value of insecticide use can be applied (Wooldridge, 2002). Thus, the insecticide use function (with the dependent variable ‘amount of insecticides’) and the production function with the damage control function (dependent variable ‘log yield’) were estimated simultaneously. Assuming a Cobb –Douglas type production function with an integrated damage control function the cotton yield Y can be described as:

Y ¼ a0

" n Y

# bi (xD i )


G(xP )g

(1)

i¼1

where xD i , i ¼ 1, 2, . . . , n are explanatory variables (independent production inputs like labour, fertiliser and farmer-specific and location-specific factors), bi are the respective coefficients to be estimated and xP is a vector of damage control agents within the damage control function G. Following Carrasco-Tauber and Moffitt (1992) who refer to a working paper by Babcock, Lichtenberg and Zilberman, the parameter restriction g ¼ 1 was imposed on (1) to facilitate the estimation. With the introduction of the Bt trait there are two externally supplied damage control agents in cotton production, namely ‘insecticides’ and ‘Bt-toxin’5. Hence, the specification of the (exponential) damage control function6 reads as follows: G(xP ) ¼ 1  exp(l1 xP1  l2 xP2  l3 xP1 xP2 )

(2)

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International Journal of Agricultural Sustainability

where xP1 is the Bt-toxin concentration in leaf tissue [ng toxin g21 fresh leaf], xP2 the amount of chemical insecticides [kg ha21], and xP1 xP2 an interaction term for both control agents. The coefficients l1 – l3 are to be estimated by non-linear regression methods. For the estimation of the parameters the logarithmic form of the production function is used and an error term 1 is added to the equation. The specification of the damage control function ensures that, in principle, the Bt trait and chemical insecticides are substitutes. However, complete substitution is unlikely to occur, since the Bt-toxin is only poisonous for lepidopterous pests but does not control other pests e.g. red spider mite (Tetranychus spp.) and aphid (Aphis gossypii) that are also important in cotton production in North East China.

about US$1200– 1800 per hectare and returns to labour are approximately US$4 per person per day, which is higher than the local wage rate for unskilled labour of US$1.7 per person per day. Interestingly, neither yield nor gross margin seems to bear much relation with pesticide use. In fact, farmers in the village with the lowest average number of pesticide applications (V3) had the highest average gross margin. As is commonly the case in cotton production, the vast majority of pesticides used are insecticides. In the sample of 150 farmers in Shandong Province, on average 96% of pesticides used were insecticides. Based on their active ingredients more than half of the insecticides used by farmers in our case study in 2002 can be assumed to be effective against the cotton bollworm (Helicoverpa armigera), the very pest that Bt varieties intend to control. On average some 30% of all sprays applied by respondents directly target this pest. The range of this share was very high with some farmers not spraying against the bollworm at all and others using as much as 85% of all sprays against this pest. About 60% of the farmers named the cotton bollworm among the three main pests along with red spider mite and aphid. Such decision behaviour of farmers who already invested in Bt control through their choice of variety prior to the actual field occurrence of the pest indicates that farmers remain diffident about the effectiveness of Bt control.

Results Analysis of pesticide use The main parameters of cotton production in our sample are displayed in Table 2. With around four tons per hectare the cotton yield level is among the highest globally.7 Cotton production in the Yellow River Area to a very large extent is still manual work, very labour intensive and mainly relies on family labour. Gross margins excluding labour costs range from

Table 2 Indicators of Bt-cotton production in the study area Village V1 Yield, seed cotton (t ha21)

4.0 (0.88)

V2 3.7 (0.92)

V3 4.3 (0.68)

V4 3.8 (0.73)

V5

All

3.5 (0.75)

3.9 (0.84)

Farm size (ha)

0.68 (0.25)

0.51 (0.17)

0.56 (0.18)

0.57 (0.24)

0.59 (0.15)

0.58 (0.21)

Plot size (ha)

0.22 (0.16)

0.12 (0.05)

0.18 (0.08)

0.25 (0.14)

0.21 (0.08)

0.20 (0.12)

Pesticide applications (number)

12.4 (3.3)

12.9 (3.4)

7.7 (1.8)

10.5 (3.6)

10.7 (2.5)

10.8 (3.5)

Pesticide use (kg ha21)

20.5 (10.6)

16.9 (8.7)

8.4 (4.2)

14.3 (6.2)

18.9 (8.2)

15.8 (8.9)

Average pesticide price (US$ kg21)

4.8 (1.4)

3.2 (0.6)

4.6 (1.9)

4.0 (1.5)

4.0 (1.0)

4.1 (1.4)

Production costsa (US$ ha21)

411 (136)

373 (104)

379 (102)

400 (114)

608 (207)

434 (162)

Labour input (person days ha21)

432 (155)

436 (165)

394 (107)

425 (122)

378 (112)

413 (134)

1626 (381)

1477 (458)

1791 (313)

1640 (458)

1169 (386)

1541 (449)

Gross margin (US$ ha21)

a Costs for family labour are not included. Local wage level for unskilled labour is around US$1.7 per day. Note: The sample size is 150, i.e. 30 farmers per villages. Data were collected during May – October 2002. Figures in brackets are standard deviations.

Bt-Cotton Farmers Use High Levels of Pesticides

49

The authors of previous economic studies on Btcotton (e.g. Pray et al., 2001; Qaim, 2003) found that Bt varieties not only reduced the amount of chemical pesticides but also the share of highly toxic products and therefore generate additional health benefits. In our study the share of extremely and highly hazardous pesticides (WHO toxicity classification Ia and Ib) was almost 40% on average with some variation across villages (Table 3). It must be noted that in China product adulteration of pesticides is a major problem (e.g. Liu & Qiu, 2001). As mentioned above, labelling, more often than not, is improperly done, i.e. no or insufficient information on, for example, active ingredients, concentration and recommended dose is printed on the product container. In the sample, 15% of products could not be identified and are therefore not attributable to a toxicity class. We also checked for evidence of negative human health effects from pesticides in the five villages during the reporting season. We found that most of the poisoning cases were minor health hazards, such as skin irritations after pesticide spraying (Table 4). These were generally not treated beyond washing and the affected person having to rest after spraying. However, 13 out of 150 farmers experienced medium or severe8 poisoning in the 2002 season during or after applying pesticides to Bt-cotton. This is a high incidence on negative human health effects of pesticides on farmers using Bt-cotton varieties. The prevailing high level of insecticide use, despite Bt-cotton adoption, raises some questions regarding the effectiveness of both types of damage control agents, chemical pesticides and

Bt varieties. Hence, we first examined the possibility of resistance of bollworm to the Bt-toxin. For this purpose, bollworm caterpillars (second or third instar larvae) were collected from the plots where input data collection took place and were analysed for resistance to Bt-toxin.9 The bioassay found that compared to a control strain reared under laboratory conditions, bollworm larvae collected at the study site in 2002 did not show increased resistance against Bt-toxins. Therefore, the application of high amounts of chemical insecticides cannot be attributed to pest resistance against the Bt-toxin. In China, no refuge scheme is implemented but the multi-cropping system with a wide variety of CBW host crops can function as a natural refuge by producing enough susceptible individuals that mate with resistant insects from Bt-cotton plots and hence dilute the build-up of resistance (Gould & Cohen, 2001; Jia & Peng, 2002). In addition, the frequency of resistance alleles can be reduced by late-season CBW control with chemical insecticides (Wu & Guo, 2005). A second factor that could help to explain the continued high use of insecticides and the seemingly small substitution effect of Bt varieties for insecticides is the situation in the local seed markets. A vast number of different Bt varieties are available on local markets, with striking differences in price. The price for the Monsanto Bt-cotton variety 33B is around US$10 per kilogram, but, as depicted in Figure 2, most farmers actually spent considerably less. Cotton seed is available for less than US$2 per kg and shops10 sell different qualities even for the

Table 3 Toxicity of pesticides used in Bt-cotton production (WHO classification) Village Unidentified pesticides (% of total)

V1

V2

V3

V4

V5

All

13.8 (9.8)

27.2 (14.1)

4.2 (6.7)

15.7 (13.1)

16.5 (12.9)

15.5 (13.6)

WHO toxicity group (% of identified pesticides) Ia

1.1 (2.2)

8.6 (11.1)

8.9 (10.8)

11.2 (12.3)

26.2 (14.6)

11.2 (13.7)

Ib

37.4 (18.3)

14.8 (17.7)

39.7 (14.5)

23.4 (13.7)

24.6 (18.1)

28.0 (18.8)

II

23.0 (14.9)

38.3 (22.4)

20.1 (14.3)

31.3 (16.2)

32.4 (16.5)

29.0 (18.1)

III

36.2 (13.9)

29.0 (17.2)

26.8 (16.6)

30.1 (16.3)

8.6 (8.2)

26.1 (17.4)

U

1.3 (3.7)

0.6 (1.5)

0.7 (3.2)

0.7 (1.6)

0.5 (2.5)

0.8 (2.6)

nl

1.0 (2.8)

8.6 (7.9)

3.8 (6.3)

3.2 (5.3)

7.8 (10.2)

4.9 (7.4)

Ia – extremely hazardous, Ib – highly hazardous, II – moderately hazardous, III – slightly hazardous, U – unlikely to pose an acute hazard in normal use, nl – not listed. Standard deviations in parentheses.

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Table 4 Pesticide poisoning in the sample (2002 season) in Bt-cotton production Village V1

V2

V3

V4

V5

All

Poisoning cases (% of farmers)

17

23

13

27

43

25

Slight poisoning (% of total)

100

71

100

50

46

65

Medium poisoning (% of total)

0

29

0

50

46

32

Severe poisoning (% of total)

0

0

0

0

8

3

17

15



Poisoning symptoms after/during pesticide application in Bt-cotton in 2002 Skin irritation (% of farmers)



17

17

13

13

Nausea (% of farmers)

0

0

0

7

7

3

Vomiting (% of farmers)

0

3

0

7

13

5

Headache (% of farmers)

0

0

0

10

7

3

Dizziness (% of farmers)

0

7

0

0

13

4

Some respondents stated more than one poisoning symptom.

Monsanto varieties indicating that counterfeit products exist. Also, before Bt-cotton introduction, it was common practice to select seed from the field and keep them for sowing in the next season. As shown in Figure 2, most farmers still continue this practice when using Bt varieties. Cotton is not included in the variety protection list in China and consequently intellectual property rights for Bt-cotton varieties are not enforced. Most cotton varieties (including the first Bt varieties) used are not hybrids and thus crossbreeding (with local varieties) and on-farm propagation is relatively easy. Own seed is cheaper but might show lower control effectiveness and hence the choice of seeds may influence the use of chemical pesticides. To investigate the presumption that the seed price is related to the control effectiveness, we grouped the sample by seed price. From the

Figure 2 Price and source of Bt-cotton seed of the sampled farmers in 2002

analysis of cotton leaf tissue huge variation in the Bt-toxin concentration was revealed. Comparing all farmers that used seeds saved from their previous production and those farmers who paid US$2.4 or less per kg of seed with those paying more shows a significant difference in the average Bt-toxin concentration (Table 5). This means that when farmers use their own or cheap Bt seed the plant tissue is more likely to contain lower toxin levels and hence bollworm control effectiveness could be impaired. Although a higher probability of high toxin concentration would suggest higher control effectiveness, it was found that farmers, who pay more for their seed, also spend more money on insecticides and other inputs (Table 5). The mean values for the amount and number of insecticide applications are all significantly higher for farmers using high priced seed while yield difference is insignificant. Potential reasons why farmers do not substitute Bt-toxin for chemical insecticides can be multifarious, including continued promotion of chemical pesticides by village leaders or extension agents, fear of bollworm outbreaks, perceived unsatisfactory control by Bt varieties and farmers’ lack of knowledge to assess the control effectiveness of Bt varieties. Although, in theory, the effect of Bt toxin on pests is linearly additive and even at low concentration ought to have an impact, e.g. by slowing pest development (Adamcyzk et al., 2001), this is unlikely to be the base of farmers’ decision-making. Rather, if they observe that larvae continue feeding on the

Bt-Cotton Farmers Use High Levels of Pesticides

51

Table 5 Pest control measures and yield of farmers grouped by seed price Type of seed

Number observations Seed price (US$ kg

21

)



Low price (, US$2.4 kg21)

High price ( US$2.4 kg21)

n ¼ 85

n ¼ 29

n ¼ 33

0.48 21

Toxin concentration (ng g

fresh leaf)

a

a

522

)

Pesticide applications (number) 21

Insecticides targeting CBW (kg ha

)

1.99

5.65c 652b

533 a

21

b

a

3.88a

Yield (t ha21) Amount pesticides (kg ha

On-farm propagation

4.04a

3.70a

14.7

14.3

a

20.4b

10.0a

10.8a

13.0b

a

a

7.4b

4.1

4.4

Different letters a, b, c indicate significant difference of means (a ¼ 0.05).  At the end of August.

plant, farmers may consider the toxin as not effective and therefore apply additional insecticides. We used the results from our cotton growth experiment11 as standard and found that close to 60% of the leaf samples collected in farmers’ fields had toxin concentrations below this standard (Figure 3). There is a high variation in toxin concentration regardless of the seed price but the probability that a farmer has planted sub-standard Bt-cotton is higher if own seed or lower priced seed were used. However, low toxin levels were also found for more expensive seed, hence the price is not a sufficient indicator of control effectiveness of Bt varieties and thus farmers face uncertainty.

Moreover, reduced control effectiveness due to low toxin levels is difficult to assess for farmers. Therefore, in trying to avoid yield losses, farmers may continue to rely on chemical insecticides. Antle (1983) has pointed out that in a situation with input uncertainty, economically optimal resource allocation is hindered because changes in the (environmental) conditions after input decisions have been taken can render these decisions suboptimal. Hence, under the conditions prevailing in Shandong Province, a substitution of insecticides with Bt varieties, even those explicitly targeting the cotton bollworm, is questionable. The continuation of using high levels of insecticides is an indicator

Figure 3 Cumulative distribution of Bt-toxin concentration of monitored plots (sampled at the end of August)

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International Journal of Agricultural Sustainability

of a high degree of uncertainty about the damage abatement effectiveness of Bt seeds. Such behaviour could also be a hint that farmers are unaware of the true pest control properties of Bt varieties and instead may associate the higher seed price with other traits, which in reality Bt varieties do not possess. The next section therefore investigates the effectiveness of damage control agents by applying the damage control function methodology. Production function estimation The coefficients of the insecticide use function (Table 6) show the expected signs. The number of continuous years of planting cotton on the plot (crop rotation) and high intensity of production (indicated by high labour input; these

figures do not include time spent for spraying pesticides) as well as high yield levels increase the insecticide use while more experience and higher price of insecticides (that might be correlated with better quality) negatively influence the amount of applied insecticides. Farmers also used more insecticides if tree cotton (a very tall, bushy variety) was planted. As shown in the descriptive analysis above, insecticide use is higher in the plots where high Bt toxin concentrations were measured. Since insecticide use differed among villages (Table 2), we included a location dummy for the villages. Yield differences between villages might also be attributed to, for example, different soil, microclimate or infrastructure conditions (e.g. access to wells for irrigation) as well as distinct policies of the village leader or specific agronomic practices.

Table 6 Simultaneously estimated insecticide use and production function (using 3SLS) Parameter

Insecticide use function

Coefficient Constant Labour

10.065

1

Production function with exponential damage control function

t statistic

Coefficient

t statistic

2.73

0.165

0.26

0.019

4.36

0.073

0.60

Herbicide

23.095

21.83

0.107

1.80

Experience

20.128

22.22

0.023

0.73

0.322

2.41

20.091

23.17

Crop rotation Input costs2

–

0.121

2.47

Village 1 (dummy)

1.046

–

0.48

0.129

1.42

Village 2 (dummy)

24.865

22.44

0.142

1.54

Village 3 (dummy)

29.287

24.10

0.293

2.01

Village 4 (dummy)

24.977

22.37

0.140

1.34

Insecticide price

–

–

20.176

23.02

Pest pressure (dummy)

0.374

0.30

20.101

21.97

Variety (dummy)

4.742

2.09

20.046

20.54

Cotton yield

2.419

3.64

–

–

20.001

20.42

–

–

Bt-toxin l1

–

–

0.003

0.71

Insecticide l2

–

–

0.216

1.16

–

–

,20.001

21.43

Bt-toxin concentration Damage control function



Bt-toxin Insecticide l3 Adjusted R 2

0.413

Note: T statistics larger than 1.98 indicate coefficients that are significantly different from zero, a ¼ 0.05. 1 Without labour used for pesticide application or manual pest control. 2 Production costs include expenditures for irrigation, fertiliser, mulching and machinery. Costs for labour (entirely family labour), seed costs (due to possible interdependence of seed quality and toxin concentration) and pesticides were not included.

Bt-Cotton Farmers Use High Levels of Pesticides

Following the findings of Huang et al. (2002), an important factor might also be a varying extent of pesticide promotion. Farmers generally consult the owner of the pesticide shop as well as extension staff when they observe pests in the field and tend to follow the advice obtained. The parameter results of the production/ damage control function are in line with production theory, i.e. expenditures for inputs other than pest control have a significant positive effect on yield while the absence of crop rotation tends to decrease yields. Also, the dummy for Village 3 is significant as yields are higher in this village. The most remarkable result however, is that neither the coefficient for insecticides nor for Bt toxin concentration was statistically significant. Considering the high variability in input quality and the generally low variation in pesticide use at generally high levels, these results are plausible although they contradict some other studies who found significant coefficients for the Bt-dummy and the applied pesticide quantity (e.g. Huang et al., 2002; Qaim & Zilberman, 2003).

Conclusions The case study comprised data from only one county in Shandong Province, China and one cropping season and therefore we draw our conclusions with care. Clearly, time series and panel data are preferable to investigate the farm-level impact of Bt-cotton. However, despite these limitations, our results suggest that the economic benefits of Bt-cotton in developing countries could be more limited than concluded in previous papers (e.g. Huang et al., 2003; Pray et al., 2001, 2002; Qaim, 2003; Qaim & Zilberman, 2003; Thirtle et al., 2003). As revealed by this study, the reasons are that there are some fundamental problems with the introduction of the Bt-cotton varieties in China, and perhaps in other developing countries too. First, lack of standards and unreliable quality limit the potential benefits of all input-based technologies including Bt seeds and pesticides. Second, there is a problem of collecting and using pesticide data from small-scale farmers in developing countries as a base for estimating pesticide reduction benefits from Bt crops. Third, the economics of Bt varieties, which are nothing but a new pest control option for some lepidopterous pests, crucially depend on control effectiveness. The latter is influenced by the quality of seeds, the

53

appropriateness of farmers’ complementary control methods and the severity of bollworm pest pressure. Fourth, given the imperfections in the markets for agricultural inputs and the sometimes dysfunctional agricultural extension system in China, the effect of Bt crops to reduce the use of toxic chemicals in a sustainable way and therefore realise the potential economic, health and environmental benefits are limited. Unless these problems are solved the technology may fail to live up to its potential. Fifth, and perhaps equally important, there is a knowledge issue with the use of Bt varieties by small-scale farmers in developing countries. If farmers are unaware of the true properties of Bt varieties, especially in an atomistic and largely unregulated seed market, one can hardly expect that they reduce their levels of insecticide use. By and large, these are also the simple lessons learned from the economics of pesticides (Zadoks & Waibel, 2000). We submit that these lessons should not be ignored when drawing conclusions about the prospects of Bt crops to contribute to agricultural productivity growth. In addition, we also see some problems with the damage control function methodology that has been used to assess the productivity effects of Bt crops when applied to the conditions of developing countries. For example, even though the parameter estimates of the production function are in line with production theory, the inclusion of pest control variables in this framework remains problematic under the conditions of input uncertainty. Under such conditions, quantity or value of pest control inputs may not describe the biological processes underlying the input output relationship sufficiently. Overall, our research suggests that the discussion on the prospects of Bt-cotton and other GM crops in developing countries could benefit from more and better trans-disciplinary communication with regard to the assumptions for economic models but also for the interpretation of results. To realise the potential of pest resistant transgenic varieties these should be treated as a component of integrated production and pest management (IPPM) and not as single solutions. To effectively incorporate the Bt technology into an IPPM scheme two things are required. First, the institutional environment is an important determinant of the resulting benefits of technology introduction. As pointed out by de Janvry et al. (2005), putting into place the necessary public and private institutions is a major

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precondition and challenge for the effective implementation of agricultural biotechnology in developing countries. Like previous technologies in crop protection, biotechnology alone is unlikely to ultimately solve the pest (and the pesticide) problem. Unfortunately, the belief in technologies per se is strong. For example, the need for the introduction of transgenic cotton expressing insecticidal genes other than Cry1Ac and CpIT for future pest management was recently emphasised by Wu and Guo (2005). However, in light of the results of this case study it seems more important to take into account the causes and possible remedies for market failure in agricultural input markets before introducing additional transgenic crops in China. The second challenge that needs to be overcome is that contrary to the popular belief that the solution lies in the seed, the introduction of Bt varieties should not be taken as a substitute of enabling farmers to make informed decisions. If farmers understand the true properties of Bt varieties and if they know what questions they should ask the dealers who offer them an array of new varieties, the chance that fewer pesticides will be used in the production of cotton and other crops can be increased. Another recent study from Shandong province confirms these finding, i.e. farmers who use Bt-cotton and in addition receive training in IPPM decreased their pesticide use significantly more than untrained farmers (Yang et al., 2005). We believe that the lessons drawn from this case study in China are also important to other developing countries with similar conditions that consider the introduction of transgenic crops.

Acknowledgements The experiments (leaf tissue analysis and the bioassay of bollworm larvae) were enabled by Prof. Dr Wu Kongming and Dr Zhang Yongjun from the Chinese Academy of Agricultural Sciences (CAAS, Beijing). We thank them for their expertise, motivation and smooth collaboration. The fieldwork was partly funded by FAO and this support as well as help from local staff during the fieldwork is gratefully acknowledged. Helpful comments were provided by Alain de Janvry, Lukas Menkhoff, Max Whitten, Jan Zadoks and three anonymous reviewers. Their

International Journal of Agricultural Sustainability

feedback is highly appreciated, while all remaining errors are solely our responsibility.

Correspondence Any correspondence should be directed to H. Waibel, Ko¨nigsworther Platz 1, D-30167 Hannover, Germany ([email protected]).

Notes 1. The term biotechnology in this paper refers to the genetic engineering of plants where genes from other organisms are inserted into agricultural crops to obtain transgenic plants with altered traits. 2. As figure for total global agricultural land the 5020 million hectare stated for 2002 in the FAOSTAT database were used. 3. All five villages are located in Linqing County and village names can be obtained from the authors. The farmers were selected together with the respective village chiefs based on the criteria (1) cotton growers, (2) willingness to participate in the study and (3) representative sample of farmers with regard to socio-economic conditions. 4. Testing was conducted by Dr Zhang Yongjun, CAAS (Chinese Academy of Agricultural Sciences, Beijing). 5. A range of cultural practices can also be considered as damage control factors but due to the dominance of chemical insecticides and Bt-toxin these factors are ignored in the analysis. 6. Other functional forms (logistic and Weibull) of the damage control function were applied (see Pemsl et al., 2003), and did yield similar results. 7. Yield figures are seed cotton (lint with seed). Farmers sell produce as seed cotton without ginning. The weight ratio of seed to lint in seed cotton is about 2 : 1. 8. Grouping of poisoning into slight (symptoms such as skin irritation), medium (symptoms such as vomiting and dizziness) and severe (where the farmer needed medical treatment in a hospital). 9. Prof Wu Kongming at CAAS, Beijing, conducted the bioassay of cotton bollworm larvae. 10. There was at least one small shop in each of the villages that sold agricultural inputs (pesticides, fertiliser and seed) besides a multitude of other items. Farmers also go to the local town to buy in larger shops that are specialised in agricultural inputs. 11. A cotton growth experiment following the recommendations and advice from Prof A.P. Gutierrez was conducted close to the five survey villages. A Bt (33B) and a non-Bt cotton variety (Zhong mian 12) were planted on 108 m2 plots (three replicates each). During the whole season, plants were

Bt-Cotton Farmers Use High Levels of Pesticides

mapped weekly and the dry weights of stem, leaf, roots and fruit/flowers were determined for five sample plants per plot. Toxin concentration was measured at the same time when measurement in farmers’ fields took place and yield was measured at the end of the season for each plot.

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